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Missed opportunity

IFAs who steer clear of healthcare cover are missing a decent chance to strengthen their offering and increase the lifetime value of their clients.

According to our market outlook survey, published this week medical insurance sales accounting for only six per cent of IFAs’ income.

There are changes afoot in the 3.4bn UK healthcare market – especially for personal business where things are looking up.

First and foremost, people are buying, with industry analyst Laing & Buisson reporting the first upturn in the market for personal business since 1996 in its latest market-sector report.

What is driving it? Product innovation, especially breaking up traditional comprehensive cover into more affordable bite-sized plans, and smarter underwriting – rewarding healthier lives with premiums that better reflect their risk – and pricing – a clutch of cost cutting measures for clients to perm.

Affordability has been a key driver to product innovation and providers have been working hard to find ways to limit cover, while continuing to offer attractive benefits. Moreover, they have been drilling down to deve-lop products for key life stages that can be readily accommodated in the needs-based analysis that underpins IFAs’ financial planning process.

For example, for people facing the pressures of mortgages and young families, there are now products to bridge the gap between the conventional health and protection cover by providing up to 250,000 of healthcare benefits for policyholders struck down by a road traffic accident, heart disease, cancer or a stroke. The result? Peace of mind that major health issues will be covered at a financially vulnerable key life stage.

Similarly, planning for retirement, when budgets are invariably squeezed, there is a new product for people aged 55 and above that pays for treatment of conditions that affect this group, such as heart and eye disease, joint replacement and hernia repair, for about a third of the price of conventional cover.

This approach, matching cover to market segment, is helping providers to open new seams of business – the self employed, for example, who are being targeting with products that couple healthcare cover with business support benefits, such as an intelligent messaging service, and a 24/7 legal advice line.

Although it continues to face challenges, there’s still plenty of life in traditional cover. Through the likes of no claims discounts, excesses, co-payment and six week options, where you can go private straight away if the NHS cannot treat you in six weeks, premiums can be contained without cramping benefits. For instance, using devices such as these you can still arrange a considerable level of cover for a 70 year old for less than 1.50 a day.

But, as well as meeting demand through product design and cost cutting, providers are reassessing and changing their routes to market. Traditionally, they have relied on direct advertising and referrals from existing customers or through connections such as links with local chambers of commerce. But, while these are still productive, they are being superseded by advances in information and communications technology. The internet, for example, presents huge opportunities for lead generation. Worksite marketing is another developing avenue as employers seem increasingly receptive to provide employees with access to a broader range of benefits at discounted rates to suit their preferences and life stages.

While new products and distribution channels are helping providers to boost sales, the personal touch is still important and IFAs should remember that one of the biggest plusses of selling healthcare cover is its emotional appeal. When it comes to health, sooner or later most clients will make a claim and when they do it is a great opportunity to reinforce the value of your relationship by supporting them at what can be a difficult time.

Getting this right can help you build closer links with clients and make it easier to discuss more personal aspects of their financial planning where you can introduce other products. And with FSA regulation now providing a common platform for the health/protect-ion and life/pension sectors, this should be even easier.

So well done the half of you who have taken the plunge and varied your permissions to add healthcare products to your repertory.


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